EPS 25 - Goals, Budgeting, and Priority of Money

Jerry talks about specific steps to achieve your financial goals including ways to set financial goals and create a support system that helps you achieve them.

💬 Have a question or comment? Contact Jerry here

Episode Transcript

UNKNOWN (00:01):
Bye.

SPEAKER_00 (00:54):
And this is a Pink Money podcast where we talk
about all things related tomoney from a gay perspective.
I'm your host, Jerry Williams.
And, you know, today the topicthat comes to mind is somebody
was making a comment to meabout, you know, I really need
to listen to your podcastbecause I handle my money.
I'm just terrible with it.
And I started thinking, youknow.

(01:15):
I guess it just really dependson each individual's person of
how terrible they are with theirmoney.
I mean, are you in a lot ofdebt?
You don't have any savings?
Are you just falling behind onyour bills?
Who knows what, right?
It could be all kinds ofsituations.
Everybody has their ownperspective on where they're at
financially.
And when you work with afinancial advisor, counselor,

(01:38):
whatever you want to call thatperson who takes a look at your
finances from an outsideperspective, an outsider's
perspective, then they can giveyou their own take.
I mean, they're not going toprobably say, gee, you know,
your finances suck, but youknow, they probably say, these
are the areas that we can workon.
And this is the kind of, youknow, things I'd suggest you do.
And with that being said, Iguess, you know, um, Even though

(02:02):
a lot of things I talk about aremore in the educational aspect,
like, you know, what is an IRAcontribution, what kind of IRAs
are there, blah, blah, blah, youknow, those things are helpful,
right?
But that doesn't really get downto how it really helps the
individual, per se.
Meaning, you know, if you arelooking at your financial

(02:22):
situation and you're notentirely happy about it, you
know, then there are ways toimprove it, and there's just
some basic steps you can take.
For example...
if let's say you know you'rejust trying to figure out where
you are you know the first thingI would suggest you do is just
create some financial goals youknow where do you really want to

(02:43):
be and when you want to getthere like are you trying to
work your way to you know ahundred thousand bucks are you
trying to work your way to yourfirst thousand ten thousand
whatever it is you know then youyou can set that goal and you
can create a strategy to helpget you there.
So with that being said, whenyou set your financial goal,

(03:04):
let's just say you're workingtowards your first$10,000, okay?
So if that's your goal and it'srealistic for you because you've
created your budget and you havean idea of how much money you
can allocate towards that goalwithout stretching yourself
completely thin, Let's say thatyou're going to try to get there

(03:26):
in three years.
You would need to save around$277 a month.
If you get paid, let's just saytwice a month, about$138 every
time you get paid on a bi-weeklybasis.
That can probably be fairlyachievable as long as you stick

(03:49):
to that goal of saving thatamount of money.
Now, When you're looking at thatgoal, the first thing you really
want to do is not only set thatgoal, but you need to create a
strategy to help get you there,meaning we need a priority of
money.
So that means the first thingyou need to do is just simply

(04:11):
start with the basics, and thatmeans...
So we need to create at least asafety cushion for ourselves of
ready available cash.
And that's probably looking likethey used to say about six
months worth of money, you know,could be even further than that
just depends on your situation.
Meaning, if you lost your jobtomorrow, and you needed to rely

(04:36):
on your savings, how far wouldthat take you?
Well, of course, you need tostrategize and figure out what
are the basics right foodshelter you know the utilities
those things have to get paid sowhat is that number you know
what is that nut that absolutethat absolute amount of money
that you need to bring into thehouse to keep your head above

(04:57):
water now that doesn't mean youknow going out and buying
clothing it doesn't even meanpaying all your credit card debt
it just means can i put food onthe table keep a roof over my
head without defaulting onanything okay so when i say you
know it doesn't even matterabout doesn't even take into
account your credit cards so thenext step then would be to look

(05:20):
at where am I in terms of payingoff debt that I have?
And that could be your car loan,It could be your student loan.
It could be your credit cards,of course.
And it could be maybe a personalloan.
So those kind of debts.
Maybe even have a debtobligation to maybe a family
member.
You know, I don't know.

(05:41):
So you just want to take thosethings into account.
So anything that could be kindof pushed out, like let's say
your credit card debt, you canprobably call the bank and say,
hey, you know what, I'm out ofwork.
and I need to skip a payment ortwo until I get back up on my
feet.
Now, they probably will.
Now, your landlord, if you'repaying rent, they may or may not

(06:05):
give you that luxury.
right?
They may be able to, you know,let's say give you 10, 15 days
grace period, but they'reprobably not going to go beyond
that.
I mean, we're not in thepandemic anymore.
So they're a lot more apt tokick you out versus, you know,
help you stay in.
And if it's your mortgagecompany, you have a house and
you have a mortgage that you gotto pay.

(06:26):
Now they be more, they may bemore willing as well to help you
out and maybe be more willing tohelp you go a month, you know,
probably two at the most youknow without going into complete
default and reporting thatnegatively on your credit
report.
So all I'm saying is that youremergency fund should take that

(06:46):
into account and that's theamount of money that you need to
set aside just to give yourselfthat little cash cushion to fall
back on if and when it's needed.
So the first thing we want to dois take care of our emergency
fund the second thing we want todo is pay down our debt and the
third thing we want to do isstart saving for retirement and
after that save for everythingelse and the reason that

(07:08):
retirement goes in really thethird place is because it
requires so much money andReally, they used to say about a
million dollars is where youshould shoot for.
I guess it really just dependson your personal situation and
what you're trying to achieve.
What kind of retirement are youreally actively looking at?
And really whether or not you'replanning for...

(07:29):
Social Security to be a part ofyour world or not.
So ideally, we wouldn't count onSocial Security in the grand
scheme of things.
But hopefully, the governmentkeeps that thing going and keeps
it fully funded.
And it doesn't have to besomething that we have to really
worry about.
But nevertheless, you want to goahead and use that simple
priority money so that you havean idea of where you're going

(07:52):
and what you're trying to do toget there.
And so saving for retirement iseven before saving for things
like your children's education.
Now, oftentimes people will say,well, that's more important than
me retiring.
Well, is it really?
Because if it gets down to, youknow, the fact that you've got
all this money sitting in yourchild's, you know, college
saving fund and you're out ofmoney, you might have a tendency

(08:16):
to raid that college savingsplan, right?
That's not what you want to do,but that can happen.
Especially again, if you've put,you know, sort of the cart
before the horse, so to speak.
Now, It is a good idea to startsaving for college early, no
doubt.
But you really have to have youract together in terms of, again,
your budget so you know whereyou're at and where you're going

(08:37):
and what it's going to take toget you there.
Now, oftentimes people hear theword budget and they're like, I
don't even know what that means.
I don't even want to think aboutit.
You know, I don't know how tobudget my money, blah, blah,
blah.
So there's all kinds of softwareout there and there's lots of
different ways to help youcreate a budget.
But really, All the budgetreally does is help you track
where you're at and what youplan on spending based on how

(08:59):
much money is coming in.
So you know how much money youget paid annually, monthly,
weekly, biweekly, whatever itis.
So you can start there.
And then you sort of just workyourself backward.
Because again, you have yourfixed expenses, the things that
don't change, and then you haveyour variable expenses, things
that are all over the board,let's say food, entertainment,

(09:21):
clothing, you know, those thingscan change, you know, very
rapidly.
And those are controllable,right?
Because you know how much moneyyou can allocate towards food to
keep yourself alive it doesn'tmean maybe you're buying steaks
every week but you know thebasics right if you spend I
don't know let's just say$150 aweek on food and sometimes you

(09:44):
go way over you know if you'rehaving a party or again you're
writing friends over or it's aspecial occasion you might over
buy right but maybe you can playcatch up the next week and cut
back a little bit because youover spent in that week and
maybe you know you start havingspaghetti for two three nights
You know, something easy likethat.
And it doesn't require youreally going to the grocery

(10:05):
store again.
That is all really under yourcontrol.
So budgeting really is a way foryou to just create a strategy to
get you where you want to go andtrack your money in a broad
sense.
Some people are very diligentabout their money.
They know where every dollargoes.
And some people are very looseabout it.
And, you know, they just kind ofguesstimate, ballpark, you know,

(10:27):
their way through it.
Whatever works for you, but thecloser you are with your money,
then the more accurate you'regoing to be and the further
you're going to get.
Because again, if you're saving$138 every two weeks, then you
know what that's going to taketo get you there, right?
And that's not going to change.
So if you only have X dollarscoming in, you've got to adjust

(10:48):
everything so that you canachieve that goal if it's,
again, achievable.
If it's not, adjust the goal.
Push it out.
You know, It has to beachievable for you.
That's all I'm saying.
So you could work with somebodyor do it yourself.
If you really feel that youcan't control your money, get
yourself on some kind ofautomatic bill payment so it
pays it automatically.

(11:09):
And set yourself X number ofdollars in your checking account
or what have you.
Put it on a spending card sothat when you go to the grocery
store, you don't overspend.
You only have X dollars.
And once you reach that level,then it's done, right?
You're going to be a lot morecautious about what you buy and
the amount, how much thingsreally cost.

(11:29):
Maybe you're going to be morecost conscious about using
coupons and what have you.
All that's fine.
All that's fine.
But again, it just really startswith you creating a strategy to
get you where you want to go.
So beyond that, I think thatwhen people say that, again,
they're really terrible withtheir money, it's most likely

(11:52):
because, again, they don'treally track it very easily or
very readily.
And then when they want to buysomething, they probably either
have to um you know just kind ofagain guess it or they put it on
their credit card or whatever itis so you those are the kind of
things you really don't want todo so if you put let's say

(12:12):
things on your credit card thenlet's say you're taking the kids
to disneyland and you'veballparked that you're gonna
spend i don't know i'm justgonna say four thousand i don't
know three thousand whatever itis so you know, throughout the
year, then you can put enoughmoney aside so that you can have
that vacation, right?

(12:33):
So if, let's say, you can'treach that in a year, then maybe
the Disneyland vacation is goingto be, it's going to have to be
pushed out to maybe the two-yearmark, right?
Because that's an expensivevacation.
And that's just how it goes,right?
So you know what you can affordand what you have to do to get
you there.
So I don't want to belabor thepoint.
Hopefully that makes a lot ofsense.

(12:54):
And You can just use that simplepriority of money of paying
yourself first.
They always say that, but that'swhat you have to do because if
you don't pay yourself, who is,right?
Nobody.
So you got to start with savingat least 10% of, I say at least
10% of what comes in the househas to go automatically to
savings.
And you create your littleemergency fund and then you pay

(13:15):
down your debt next and you savefor retirement third.
And then you can do whatever youwant to after that.
But that should just give you abasic strategy of where to go.
And again, use budgetingsoftware, use a pen and paper,
whatever it takes to help youeyeball where you're at.
I always say a good thing, too,is to involve others in the

(13:35):
family.
So if you have kids, you haveyour husband, you have your
wife, you have your boyfriend,girlfriend, whatever, you can
involve them as well.
So let's say that, again, you'retrying to reach that$10,000
mark.
Well, you can put that goal onthe fridge, and then every time
you achieve that first step,second step, you know, we've

(13:56):
made the...
I put that money aside this weekand I wasn't able to do it the
next time so I put a little bitless but you know you can just
keep tracking it tracking ittracking it so it becomes
everybody's goal and everybody'son board and everybody works
towards it and helps everybodyachieve it because when you have
others holding you accountablenot just yourself you know you

(14:17):
can cheat easily you know all onyour own right it's like if
you're trying to diet and youhave that extra brownie who's
going to stop you right nobodyso if sometimes your will power
is a little weak you know havingsomebody else who looks at you
crossways and says you know whatI mean come on if you're going
to try to lose that extra 10pounds then that is certainly

(14:38):
not going to help or againyou're going to have to make
some trade-offs but it's just amatter of just keeping you on
track right and it's it's also agood idea to help you know when
you have these little wins ofcourse you know then you can do
a little celebration but youknow all I'm saying is It's a
good way to post your goals andhave everybody on board with

(15:01):
helping you achieve that samegoal.
Because really, if we're alltrying to go to Disneyland, then
everybody has to all row in thesame way.
And I think that's the best wayto help get you there.
So if there's something inparticular about your financial
situation that's reallytricky...
Maybe you do need to speak withan expert.
Maybe you do need to seek out afinancial guide or counselor or

(15:24):
what have you.
Don't hesitate to do that.
There's lots of anonymous waysif that's going to make you feel
better about it.
Again, somebody who knows yoursituation can be very helpful.
One thing I'll caution you aboutis sometimes you get people who
will be very free to give youall kinds of advice and it can

(15:45):
be very suspect.
Also, be cautious about who'sgiving you advice.
You know, I've encounteredplenty of people, you know, who
want to give you investmentadvice, you should buy this
stock, you should, you know, buythese options, you should do
this, you should do that, youknow, this, whatever, I would
say stick to the basics.

(16:06):
And again, if you're not a realastute investor, then don't do
it.
Right?
Because it's a good way to loseyour money.
You know, if you're a gambler, Imean, a good poker player and
you're comfortable doing that,well, you know, good for you.
But if you're a novice, then youcertainly don't want to go to
the card room and start playingpoker and you don't even have,
you know, your savings accountbuilt up.

(16:27):
Not a good strategy.
So not trying to tell you whatto do.
I'm just giving you some helpfulhints and tips and things that
I've seen that are good anduseful ways to help get you
where you want to go.
And one thing I will say aboutinvesting, since I brought it
up, is, you know, I would sayagain, and I've talked a lot

(16:48):
about this, but again, if you'regoing to do any investing, you
would not do that with yoursavings account, right?
You want to keep that moneycompletely liquid.
Now, let's say you've got yourfirst$3,000 set aside, and
you're worried that you might gospend it.
Well, you could just buy...

(17:10):
certificate of deposit and youcould put that money into that
CD for let's say six months ormaybe it's a year and it could
earn maybe a higher interestrate than you could just letting
it sit in your savings accountnow you could do that right And
again, that requires a littlebit of discipline because that
money is sort of moved off thebooks, so to speak, and it's in

(17:30):
this certificate of deposit.
And if you run into a situationwhere you absolutely have to
crack that CD open, then you'regoing to pay a penalty.
So should you do it?
You know, you have to reallyweigh that.
Is it really wise?
You might want to take, youknow, instead$2,000 instead of
all$3,000, put that into a CD.
If again, you're kind of livingon the edge and you say, hey,
you know what, I don't thinkit's a real concern for me right

(17:53):
now to lose my job.
I'm too high in demand.
Well, good for you.
Then maybe.
But it's just something you haveto weigh.
But it's certainly an optionwhen you start building up your
savings.
You want to really...
put it to good use in terms ofmaking it work hard for you.
But should you be putting thatinto the stock market would be
another story because there'scertainly no guarantees there

(18:16):
where like most certificate ofdeposits, you buy it, you know,
chase JP Morgan, what have you,you know, those are all going to
be FDIC insured.
Can you buy uninsured CDs in theopen market?
Yes.
Should you, I would say probablyno.
And again, unless you're reallya student investor, you've got,
you know, plenty of cash andyou're very on top of your
investments.
Um, Should you be buyingindividual stocks at this point

(18:39):
if you're just getting started?
No, right?
No.
Again, there's way too risky.
You don't have the money setaside yet to be buying stocks.
Should you be buying maybe alittle bit of mutual fund?
Yeah, you could do that.
You could buy a stock-basedmutual fund or a stock bond
mutual fund.
You know, put your$50,$75,$100 amonth or what have you into that
thing because that's a long-terminvestment and you can really

(19:01):
just...
You know, put that money aside.
And if you do need it, you couldeasily redeem that place of
redemption and just get yourcash back and make a sale.
Now, again, does not guaranteeit's going to go up.
You could lose money, you know,but it's certainly an option.
Again, that's not where youremergency money is going to be.

(19:22):
Plenty of people have alwaystold me, you know, I don't
really have an emergency fund.
You know, all my money is in themarket.
And I'm like, okay, my emergencyfund is my credit card.
Okay.
Okay.
Again, to each their own.
I wouldn't suggest that, but itdepends on what your liquidity
is.
So if you have a high degree ofliquidity and you're not really
worried about it, I know wecertainly saw a lot of credit

(19:44):
lines cut back in 2008 wherepeople had$10,000,$15,000,
whatever,$20,000 of creditavailable.
Next thing you know, it washalved.
So you can't rely on that 100%.
It just depends on yoursituation.
But since those are things thatI've seen anyway.

(20:05):
So the other thing I wouldcaution you about is if you see
sort of a deal you can't passup.
Right.
So oftentimes people will try toget you to buy a certain stock
or you'll see an IPO coming outand you think, oh, my gosh, I
really need to buy into thisbecause that is just a golden
opportunity.
Is it?
You know, I don't know.

(20:26):
Because IPOs can go sideways.
They may be a really good deal.
Most average people are notgoing to be able to buy into an
IPO, an initial public offering,meaning a company who's decided
to go public with their stockwill issue an IPO.
Most often IPOs are bought up byinstitutional investors.

(20:47):
So you can sometimes getinvolved in an IPO if you're an
accredited investor, meaning youhave like over a million dollars
or so and you make about$200,000or$250,000 a year, then really
what they're saying is you havethe means in case this thing
goes sideways.
But again, if you're juststarting out and you're not

(21:08):
anywhere near being anaccredited investor, it's not
something you really want to do.
There are different ways thatyou can buy.
into ipos through you know otheravenues like etfs etc mutual
funds etc and you know that'spossible but you know again
speculative investing is notwhere you're at unless again
you're a really astute investorand you know where you're at or

(21:28):
you're really seasoned andyou're probably not even
listening to this podcast anywayif you're a seasoned or real
astute investor you're alreadyoff doing your thing and this is
too basic for you but foreverybody else who's not quite
there you're working your way toget there we want to start with
the basics you know, create yourgoals, your financial goals,
whatever you're trying toachieve, then set your budget so

(21:50):
that you can have a means to getyou where you want to go, track
it, make sure you're diligentand, you know, kind of marking
where your progress is and holdyourself accountable by using
other people and having supportso that people can cheer you on
and help get you there as soonas, you know, as soon as you

(22:11):
can, as soon as you can getthere, you know, as soon as
possible, because that's reallywhat you want to do.
And once you achieve that goalof having 10,000, then move on
to your next goal.
So anyway, that's pretty much itfor me.
Have any questions, reach out tome.
I'll be happy to give you a handto the best of my ability.
You have a great day, and wewill talk at you later.

SPEAKER_02 (22:49):
A man can love a liar, and a woman can love a
thief.
There's a few things, baby, youshould know about me.
I've always looked for power inall the lovers I knew.